China International Capital Initiates Coverage On Bona Film Group

China International Capital has initiated coverage on Bona Film Group BONA with a Buy rating and $6.90 PT. China's film industry should see 32% CAGR from 2010~2015, making it one of the most attractive industries for investment. This strong growth offsets the cyclical and product-driven nature of film industries in more developed countries. As a film distributor, Bona is well positioned along the movie industry value chain; our research shows that companies with the most efficient distribution usually become market leaders. China International Capital expects Bona to distribute more than 20 films in 2011; it has a direct investment in most of these films. It also expects its theater business to account for 18% of 2011 revenue with 11 movie theaters in operation. China International Capital expects Bona to realize non-GAAP net profit of $19.3mn in 2011 and $24.1mn in 2012, representing 79.3% and 25% YoY growth. Risks include piracy, seasonality of the film industry, product-driven volatility, and increased competition. BONA closed Friday at $5.05